November 13, 2024 • 39 mins
📊 Are short-term rentals still a great investment? Join Dr. Rachel Gainsbrugh and Jamie Lane from AirDNA as they dive deep into the latest trends in the STR market. Discover the secrets to analyzing supply and demand, understanding occupancy rates, and identifying growth opportunities in key markets like Miami and Orlando.
Whether you're a seasoned investor or just getting started, this episode is packed with actionable insights! You'll learn how to use tools like AirDNA to evaluate market health, avoid potential pitfalls, and make data-driven decisions to optimize your rental property for long-term success.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jamie (00:00):
we might see increases and decreases in occupancy over the next
(00:03):
one to two years, but I don't know aboutyou, Rachel, but I'm not making this
investment for the next one to two years.
I'm making this investmentfor the next five to 10 years.
, I'm looking for areas where I expectto see longer term growth in the
Metro areas that sort of support.
, Those destinations.
Rachel (00:20):
Hello.
Hello.
My name is Dr.
Rachel Gainsborough, and I am obsessedwith all things, short term rentals,
revenue streams, and helping you navigateyour career, real estate, and your busiest
and most wonderful seasons of life.
So grab your coffee, get comfortable asyou get ready to learn and grow with me.
This is the luxury rental doctor podcast.
(00:44):
Jamie, as the head of data for AirDNA,what is the single most important
thing new investors need to be lookingat when they're looking to dive
into short term rental investing?
Jamie (00:56):
Obviously , as a data guy, , I always suggest that people Dig into
the data before they start investing.
, and that's what AirDNA reallytries to provide is when
you're going into a market, youdecided you're going to invest.
And what I always want peopleto do is start with just
getting a health of that market.
Getting a sense of how much issupply growing in that market.
(01:17):
So are there more competitors or less?
And just to give an example of likein New York right now with all the
regulation, there's significantlyless competition and you juxtapose
that to Paris coming off the Olympics.
There's so much morecompetition in that market.
So you couldn't like, puttogether like two.
Totally different markets right now.
(01:37):
So if there's a way that you couldoperate in New York today with all
that decreased competition, movingthrough the regulation noise, amazing
market right now on the other side,like Paris, like you've got so much more
competition and there's 50 percent morelistings today than there were last year.
That's going to be a really toughenvironment as a new investor
coming into that type of market.
(01:58):
So really getting a sense of.
What is the supply picture look like?
And then, , conversely onthe demand side, is there.
The demand keeping up withthat supply that's coming in.
, so just starting there, , as an economist,, me telling people, , get a sense of
your supply and demand, how much doessupply changing and is demand keeping up?
Rachel (02:18):
Okay.
So this is.
So good.
I was just on a coaching call yesterdayand we were looking at two markets that
are alarmingly large here for the U.
S.
Domestically, , one of our membershad a property that they wanted to
rent out from their mother to thenrent out to short term rental guests.
So essentially an arbitrage strategy.
(02:39):
It's in Miami.
So just to like narrow down and narrowdown and go further and further deep
into the sub market to even identifywhere that property is located, , was
really interesting and AirDNA helped us.
To accomplish that, , because there wereover 30, 000 listings, , in that market.
Similarly, we're looking at Orlando.
(03:00):
So these are markets with, , tens ofthousands of listings and the competition
is so steep and the properties thatare top performers were beautifully
laid out, but for the investment,, you're going to go in paying 1.
7 million and you're generating98, 000 a year, which.
98, 000 years, a whole salarysounds great, but do I, you know,
(03:22):
that mismatch of, , the grossyield or the return on that?
, I would question that, but sinceit's a property, her mom already
had, I was like, heck yeah, let'ssee, , how much juice we can squeeze
out of this particular property.
So that is awesome.
So you talked about supply and demand.
So in that situation, , we talked about,We know that Miami is the destination.
We know that Orlando isdefinitely a tourist destination.
So that's great.
(03:43):
, again, we were able to find thisinformation inside of air DNA.
, We digged in and we're so gratefulto have a tool where we're not second
guessing ourselves and we're able , tofind that information within the platform.
Jamie (03:55):
Yeah.
And that's a great sort of next stepthat I always talk people through is
once you get a sense of your market,the supply demand, then it's trying
to get a sense of how much is thatgoing to earn on average, and then
go into like revenue percentiles andyou can get a sense of like, Okay.
What is the average property earning?
Then get a sense of like, all right,what does that average property have?
(04:17):
And then going above and belowthat of like, all right, the top
performers, what are they doing?
The bottom performers,what are they doing?
And then where do I think myinvestment is going to slot into that?
Yeah.
And you could go into, , Orlandoand , run the numbers.
And it's like, Oh wow.
This is going to be a home run.
And then you look at thoseproperties and you're like.
Oh, I'm not going to do a full game room.
(04:37):
I'm not going to do a themed house.
Like I'm going to do like maybe theaverage and then you got to go in and
find other properties that are moreaverage in terms of their decor, their
amenities that they offer to someone.
Or if you are going to go all out andyou're going to invest a lot of money.
Like you can see what that potentialis and like what the top 10
percent of properties are earning.
(04:58):
And that may be what you want, butat least getting that range of not
every three bedroom home is going togenerate the same amount of revenue.
You got to understand the work thatgoes into What's going to be a top
performer versus what's going tobe an average performer and what's
going to be an under performer.
Rachel (05:15):
Okay.
, this is so good.
And I felt like this is probably goingto be one of those selfish episodes
that I asked my own personal questions.
I'm doing my best.
I'm doing my best to make sure we'regetting the information for the people.
So I think you're hitting thenail on the head of something
that is, is very, , controversial.
Some people go into air DNA and theyget a little bit, , excited when
they see that top number, they'relike, Oh, wow, I can make 107, 000.
(05:37):
Great bet.
You have to dig a little deeper.
You have to look at, , thosetop performing properties.
If it's an entire movie set where , theteam from Disney came in , and built
that out, and it's a 200, 000, 300, 000renovation, you want to ask yourself some
questions, like, Is, do I have this budgetto, to make something like this happen?
(05:58):
And I don't recommend it, honestly,if you're just getting started.
So take a B simplify , and determine,you know , what's going to be
within my budget, within my returnon energy as well, those types of
renovation projects, even if it's.
roof replacements, flooring, fix and flip.
, tHat's a lot of time capitaland you're managing contractors.
So I, I recommend small issue renovations,20 K and under, , just to get the
(06:22):
place a little bit more modernized.
So definitely, , take a look at that.
So supply, I feel like it's very obvious.
, I feel like, okay, we wereseeing 30, 000, 30, 000 listing.
That seems obviouS.
, that's a large supply.
So using AirDNA, Jamie, would wecompare year over year supply?
And as far as demand,what does that look like?
(06:42):
How do we know and how do we use thetool to the best of our ability to get a
good insight on what demand looks like?
Jamie (06:49):
Yeah.
So in the overview section of AirDNA,so you can go into Miami and like
right on the overview screen is a.
Chart of what has supply beenover the past three years.
So one of the fun new innovationswithin an air DNA is that that
chart is now filterable because notevery listing is the same, not every
listing , you're competing with.
(07:11):
So I can get a sense like.
If I'm doing an entire home listing,like I don't care about private and
shared rooms, so , let's get rid ofthose and see what the chart looks like.
If I'm doing a four bedroom house, likeI really don't care what's happening in
one and two bedroom properties in Miami.
So let's get rid of those.
And if I'm, let's saydoing a single family home.
(07:31):
Maybe I don't even care about what's inthe, all the multifamily, like Skyrise
apartments downtown, because what I thinkI'm going to be able to attract is people
that want a full single family home that,, is maybe outside of the downtown core.
So I can set those filters like housesand villas, , four or three plus bedrooms.
, And then get a sense of.
(07:52):
What is the supply look likejust for those type of properties
over the past few years?
And that's going to give me a senseof, okay, is supply increasing?
Is it decreasing?
Typically, like I want to seesupply increasing, like it is a red
flag for me by going to a market.
And see supply down over thepast year, because that tells
me that people are leaving.
(08:13):
People are leaving.
That's probably becausethey're not making money.
Rachel (08:16):
Oh, , can we let that breathe for a second?
For those who are sitting inthe back, let's come back to me.
If you're multitasking, whatJamie say that one more time
for those sitting in the back.
Jamie (08:27):
So if I look at a market and I see supply decreasing, that is a red
flag because it means people are leaving.
And if they're making money morethan likely, they're not going to be
Rachel (08:36):
leaving.
So good.
So good.
So we can equip ourselvesand mitigate risk, right?
By evaluating the numbers.
Is that right there?
You just gave us a wholegem, , watching that pattern,
that trend, are people leaving?
If people are running for thehill, something is the matter.
Something is wrong.
EiTher they're not making money.
Regulations have changed drastically.
Is that another red for you potentially?
Jamie (08:58):
That's another, like if I'm looking at New York and I'm
seeing dramatic declines in supply,it's like, all right, that's not
because people weren't making money.
Rachel (09:05):
Yeah.
Jamie (09:06):
Is because the city of New York implemented a new law that
essentially outlawed short termrentals or rentals less than 30 days.
So that to me is another red flag of,I need to dig a little bit deeper and
understand the regulation and maybe that.
Seeing that then allows me to Googlea bit and like, all right, like I
(09:27):
don't need to waste my time with thismarket because the regulation does
not allow what I'm looking to dO.
, conversely if I may be open tomidterm rentals and see that, Okay.
30 plus day stays are allowed in New York.
We've seen a big decrease in supply.
Maybe that is an opportunityfor me to look at in that city.
(09:47):
Oh, so good.
Rachel (09:48):
So good.
All right.
So I love this where thisconversation is going already.
You've already givenus , a, roadmap of identify.
Okay.
Is this market, , amarket worth looking into.
So what are some other, , I would saypitfalls or things that we should be
avoiding during our initial analysisfor all the new investors out there?
Jamie (10:07):
Yeah.
So next, like, all right, let'ssay I've looking at this market,
looking at Miami and I'm seeing.
Let's say 5 percent supply growth.
So no red flags on declines.
Like I'm seeing steady growth, whichis to me a sign of a healthy market.
, Then I want to get a sense of, okay,what is happening with occupancy?
Cause if occupancy is flat or increasing.
(10:29):
That lets me know that this market isabsorbing that supply, that there's more
people coming in and staying new gueststhan there are new supplier, at least.
, tHey're within the same realm.
If I start to see big decreasesin supply, let's say, , are in
occupancy, let's say supplies up 5%.
And occupancy is down 5%.
(10:50):
That tells me that, allright, , demand is flat.
There's the same number of people staying.
There's just more supply, whichmeans everyone's getting a little
bit less in terms of, , guess.
So what I, what the sweet spotis, is that like supplies growing,
but occupancy staying flat.
, or increasing, which tells me thatthis market is poised for more growth.
(11:11):
If I'm looking at a market where it'ssupplies growing and occupancy is
decreasing, it means that it mightbe oversaturated at this point, or at
least that there's not enough demandto keep up with the supply, , that
could be temporary, so I'd want to lookat that over time, but at least tells
me that I probably need to look more.
Rachel (11:28):
Okay.
So when you say, when you'relooking at the occupancy.
Are you looking at the overall occupancypercentage for that period of time and
Jamie (11:39):
comparing looking at, I'm looking at it for that period of
time and compared to last year.
Okay.
So on the sort of top of thepage, it's going to give you the
occupancy for the last 12 months.
Okay.
And then it's going to tellme if the occupancy for the
last 12 months is greater.
Or less than the year prior.
We make that very front and center ofif that's positive and green, , okay.
(12:00):
You're good.
If it's flat, you're still probably good.
If it's declining in red,that means there's something
to look in further there.
Rachel (12:08):
Interesting.
Okay.
I want to do something alittle bit non traditional.
, typically for the podcast, , Irespect that it's an audio platform,
but guys, I want you to see this.
I think it's just so important.
I'm a visual learner andI'm sure you are too.
So as Jamie's talking, I'm on the sidewith one hand on my keyboard and I just
(12:29):
pulled up that market that I mentioneda little bit earlier in Miami and what
Jamie was just mentioning for those whoare listening on the podcast, head over
to the YouTube channel because I've got ascreen share real quick just for a moment.
Okay, I'm not going to.
Go all in, but Jamie, we might need to doa little screen share walkthrough, , at
some point, but , we'll figure that out.
But I'm looking at thisoccupancy rate here.
We're at 59%.
(12:51):
And guys, for those of you whoare long term, , rental investors,
listen, It's a mindset shift.
It's a mindset shift.
We are not necessarily looking for 100percent occupancy for short term rentals,
especially for a larger properties.
We like 65 percent to 75 percent fora larger properties for short term
rentals are midterm rentals wereable to achieve a 90 plus percentage.
(13:14):
But the reason that 65to 75 percent occupancy.
Is the sweet spot for us for ourfive bedroom pluses is because we
have time in between to let theproperty breathe a little bit.
We're able to really make all ofthose, , maintenance calls and updates
to make sure the product is in tippytop shape and we make more money at that
little bit of a lower occupancy ratethan if we were to keep it booked all
(13:36):
the time and start getting complaints.
Complaints if it'sbooked at 90% occupancy.
We get complaints.
We just don't have the timeto, , tighten up all the screws.
So keep that in mind.
I know I went on a tangent,re-listen to that part.
, but nevertheless here I'm seeing anoccupancy rate of 59% with a plus 2%.
So you're telling me this is theyear over year comparison, Jamie.
Jamie (13:55):
Yep.
So looking at over the past yearthat it's run at 59 percent and
you can see it down below there.
So we're peaking out in March atjust over 75 percent and we hit a
low in September of just under 50%.
So average is out to 59%.
And that 9 percent for this past year,and that's from September to August, , is
(14:18):
2 percent higher than it was in thesame 12 month period the year prior.
If you click on that dropdown,you can change it from past
12 months to past two years.
So you can actually see by month whereit's either increase or decrease.
Rachel (14:34):
Nice.
Nice.
Okay.
So this is so good.
So Jamie, when we hear, , the rhetoricthat all the markets are saturated,
Airbnb saturated, now we have a tooL.
, that we could leverage , andidentify whether that's true
or not, because saturation is ascientific and economic term, right?
It's not just, it's saturated.
(14:55):
Cause I feel like it's saturatedor it's actually, cause I see
a whole lot more listings.
There's a little bit more to that, Jamie.
Jamie (15:01):
Yeah.
And it's definitely something thatwe want to look at over time because,
and you can't get around the factthat the industry went through
a boom In 2021 and 2022, , justabout every market you look at.
Reached peach peak occupancylevels during that time.
And it wasn't because all of a suddenrecord number of people were using short
(15:25):
term rentals because of the pandemiccaused 20 percent of the listings
out there that disappear overnight.
People that had secondhomes started using them.
People that were renting outmultifamily buildings in urban areas.
So their demand disappear.
So they converted it to long term rentals.
, aNd as demand after COVID came back,that caught, that just pushed occupancies
(15:46):
much higher than we'd ever seen before.
So as an industry, we have been comingoff of those highs, but it's not to
the way where like it's alarming to me.
Given that we're now likeroughly at pre COVID levels.
So we can go back and air DNA and seewhat that market was operating at in 2018,
2019, before things got crazy with COVID.
(16:09):
And that's my sort of comparisonof are we really weak?
Or is this just what I shouldexpect for this market?
Cause the highs of 2021 and 2022.
We're not to be expected to last forever.
We were forecasting thatthey were going to come down.
They did come down.
And so now when I'm getting a sense, is59 percent good for, , for Miami Dade,
(16:31):
it's like, all right, , let's look at howthat market looks like back through time.
And that can give me a senseof, all right, , yeah, March,
I can expect things to be high.
But no, a lot of people, a lot of touristsaren't coming there in the winter.
Are in the summer, , duringthose really hot months in Miami.
So 59 percent is probably what Ican expect, , in a healthy market.
(16:52):
Given that I'm going to have somehigh months and some low months.
Rachel (16:54):
Got it.
Okay.
This is so good.
What are some other tips that weneed to take into consideration
when you're using AirDNA?
And for those who may not be aware,AirDNA is my number one go to tool for
evaluating new markets for short termrentals to, for evaluating our current
markets, , for short term rentals as well.
We want to keep, , A pulse on how ourproperties are doing on a quarterly
(17:17):
basis compared to the market as a whole.
So I find it to be the mostcomprehensive tool that's out there.
And the reason I love it is becausewe have those years and years
and years worth of data that wecan use, that we could review.
You just mentioned how to setourselves up for success by really
looking at the pre COVID numbers,2018, 2019, because now we're.
(17:38):
In that, , pre COVID environment.
, whAt else do we need to know?
Jamie (17:41):
Yeah.
And we touched on it a little bitearlier, but when you're using our
rental calculator or rentalizerthat we call it, , a lot of times
you can get really excited when youfirst see that number or get really
fast when you first see that number.
Really, that's it.
The thing to know is that what thattool is doing is it's going out and
trying to find comparable properties.
And the typical rentalizer estimate,it's going to pull 12, 15, 20, 30
(18:05):
properties to you and creating thatas a user, as someone doing their full
due diligence, it is imperative thatthen you go and actually review those
properties that are being included init, because that's going to give you a
sense of, all right, maybe these comps.
Aren't relevant to the propertythat I'm actually investing in.
(18:26):
And so what I typically do is Ilook at each comp I'll click into
them and you can click into eachproperty and click through the photos.
so if you just scroll allthe way to the bottom.
That shows you each property that'sbeing used or you can't click on the all.
, it's bad.
, But you can scroll to the right.
There's an arrow there.
Just that's what I was looking for.
(18:47):
Yes.
So you can scroll through each of thoseand you can get it and click into them.
, Get a sense of, do you think thatproperty is comparable or not?
And then what I do is, , mentallyare jot down here are the figures
for the ones that I think arereally comparable with mine.
And here are the ones that I don't.
And when I average those together that Ithink that are really comparable to mine,
(19:10):
that gives me a, in my opinion, a muchbetter estimate than our overall figure.
And we do, we're gonna have some funupdates to the tool coming up where
you can actually do that on the fly,where you can add remove properties.
Oh, but for now,
But for now, it's , a, you'll lookthrough, and sort of note 'cause and just
(19:32):
here we see a range of $143,000 to., 59,
Rachel (19:37):
000.
Jamie (19:37):
So whether or not that 59, 001 is comparable or whether, maybe it's
the 148, 000 one that's a bit too high.
I'm being able to throw out the outliers.
, and get to a much more tight rangeof what, , the properties are that
are being used in this estimate.
I think we'll reallyget, , people comfortable.
And even like, when we look at this map,like you see the two on the other side of
(20:01):
the river, as opposed to all these others.
Within the same neighborhooD.
this is where, like when rentalizer andthe tools going at it, it's just drawing
circles and looking at a closer, , tome, I would say , you know what, that 94,
000, 124, 000, like given that I've gotso many in their exact same neighborhood.
Let me stick with those and let meget rid of those two other properties.
(20:24):
Cause even though they might becomparable, like I have all these other
great comps in the same neighborhoodthat I should probably be using.
Rachel (20:30):
So you're able to then narrow your focus.
And I think that's wherethe overwhelm comes in.
You go into a market like central Dade,Miami, , or Orlando, and then there's.
Tens of thousands, but if we could whittleit down, what's a good number for you?
I tell my members.
I like to see, , about20 listings to start.
And then we have our top tier thatwe know, okay, there's no way we're
(20:51):
going to achieve that because there'sa lagoon size pool, lazy river.
And then, so we know that's theceiling, that's the ceiling for us.
And then the worstproperty ever, the Okay.
photos.
It looks like grandmathrough, , through it together.
No offense, grandma.
I love you to pieces, right?
So we know that , we candefinitely, there's no way we're
going to do worse than this.
So in between it's the inbetween, but I find there's
(21:12):
some clusters sometimes, Jamie.
So there's like a batch that's in this.
78 77, 000 and then a batchthat's in the, , low fifties.
So at that point, it's a lot ofdeductive reasoning, , for my members.
I call it our PACU method.
Okay.
If it's in a destination,touristic destination, what's
the proximity to the things?
Stuff so suburban, , how closeit's to the good shops and , beach,
(21:34):
how close it is to the water.
So those are some things that you can say,okay, this property is better than mine.
Mine is like a give or take.
We go back and forth and that's theonly way that I know to do that.
For those last properties that arestanding, maybe there's eight of them,
And I just ping pong back andforth and determine, am I superior
or am I inferior to that property?
And just being radicallyhonest with myself.
(21:57):
Is that what you would recommend?
Give me some pointers.
How do I improve thatprocess a little bit?
Jamie (22:01):
No, a hundred percent.
I love it.
, cause I do the exact same thing.
I start with 20 to 30 properties thatare in proximity, same bedroom baths,
like accommodate, I'll go ahead andfilter out some that have or don't
have pools, like depending on what myproperty is going to have or hot tub.
And then it's the real work, right?
Of evaluating each comp.
And then ideally for me, it's getting to areally strong set of six to 10 properties.
(22:27):
Then , If I can operate at thesame level as these properties,
this is what I'm going to earn.
And that gives me the confidencein making an investment.
Like you said, like it takes a work.
So I'm spending a minimum, like 30 minutesto an hour evaluating comps for each.
Property that I'm looking to invest inwhen I'm doing that next level dive.
(22:50):
Like maybe I'll use the rentalizer numberas my initial screen of , does this yield
number make sense for me to dig deeper?
And then when I'm digging deeper, that'swhen I'm evaluating each individual comp.
To get a sense of does thisrepresent, , and similar to the
investment that I'm looking to make.
Rachel (23:08):
Love that.
Okay.
So let's go back to the different, , Iwould say products within AirDNA.
Of course, there's the Rentalizer.
I say AirDNA is freemium becauseyou, there is some, Aspect of it.
That's free.
You can look at the rentalizer,, that information for me.
I like to see what the occupancyrate is looking like for a market.
If I get a 50 percent or more occupancyrate already, that's a thumbs up for me.
(23:31):
It's like, okay, peopleare coming to this market.
If it's like in the 20 or 30%, it's like,oh, I don't even, I'm not interested.
I get nervous, right?
Because I don't have a, I'm notdoing a big rural glamping situation
right where you might see that.
Number one.
, number two, I take a look at therevenue, a potential high level.
I know it's, it averages all ofthose, , properties that are there,
(23:52):
but I'm still going to need to, , dosome, , digging, but what I do with
that number, say the revenue for athree bedroom, two bathroom, six guests.
And you want to make sure you've updatedthose, , data points, , is 70, 000.
And I go into the market, thepurchase price for a three bedroom,
two bathroom property ranges from 1.
(24:13):
8 million to 2.
5 million.
, that math isn't mathing for me, right?
So that's, I go to Zillow.
I'll have my rentalizer and I'll haveZillow side by side and say, okay,
for this price point, What is thepurchase price of properties available?
And so that's not goingto make sense for me.
And I did that analysis.
I found an area in Durham.
No, was it Raleigh?
So it was five bedrooms in Raleigh,a 74 percent occupancy rate.
(24:35):
Revenue potential was like 75, 000for that particular zip code, that
address like at that, , I foundanother property a while back.
It was like 999, 000 to 2.
5 million.
I was like, okay, now I'm lookingmore around the 500, 000 range.
What can I find for that?
So that immediately informs you, , yayor nay, do I want to dive deeper?
But the deep dive has to happenbefore we open our wallets.
(24:58):
Right, Jamie?
Jamie (24:58):
Yeah.
And Again, a pro tip, , you nowdon't have to go to Zillow for that.
So with AirDNA now pulling in all thefor sale properties on Zillow or homes.
com or Redfin, you canactually see all those.
Let's say you're lookingin that sub market.
You can go to the for sale properties andinstead of having to run each property
(25:19):
one by one through the for sale section,, so if you just click, , back, it should
take you to whatever market you werein, , or keep going, , so now we're in
Central Dade, , you see it, , it hasthe 635 for sale properties listed.
So now you can see each home that'savailable for sale and then what our
(25:41):
estimated revenue is for that property.
So you're getting essentially usrunning a rentalizer and every
property available for sale.
And we're going to tell you inone view what those figures are.
Rachel (25:55):
Okay.
Okay.
So I have not used it like this yet.
So for those of you who are listening,guys, I am sharing screens again.
This is so easy.
So for instance, this one is athree, two, a for sale is 625 and
the revenue, , potential is 59, 000.
300.
I've got the number of days on the market.
This is fantastic.
(26:16):
69 percent occupancy rate.
I think like something just poppedin my brain and it's sad cause , I
knew this was here, Jamie, butI didn't make the connection.
Jamie (26:25):
Yeah.
, And a lot of people haven'tmade the connection yet.
And the, One additional thing that we'regoing to have in the next few weeks, , is
we'll have the gross yield listed on it.
So making that calculationfor you of what is the revenue
divided by the for sale property.
I just fell out of my seat
Rachel (26:40):
y'all.
Jamie (26:43):
And then allow you to sort.
, we're seeing what peopleare doing manually.
And then trying to make it easier foryou to find those good investments.
Rachel (26:51):
Oh my goodness.
Okay.
So good.
So good.
Jamie.
One thing that you guys made easier forme as well was, , the table view that I
can then export chef's kiss, my favoritefavorite thing, my favorite thing.
I have so many spreadsheets where.
I can make my little notations as well.
So , this is so good.
This has been amazing.
(27:11):
So all this to say for those who arejust listening in and who are like,
okay, you guys went deep on the data,but Jamie is Airbnb even viable still?
Everyone's talking about Airbnb bus.
Is Airbnb dead?
Talk to people.
, Give us your honest.
Unadulterated thoughts , on how,, the future for Airbnb, , looks
(27:31):
as far as short term rentalinvesting, midterm rental investing.
Tell us.
Jamie (27:35):
Yeah.
So I'm putting my money where my mouth is.
Just made my own investment.
, closed on a house about three.
That I'm going to runas a short term rental.
, but, and what I tell people is you'vegot to get comfortable that people are
going to continue to choose short termrentals over other forms of lodging and
are going to continue to be traveling.
So people will travel if theyhave a job and have income.
(27:58):
I do not believe that we're goingto be going through a recession.
Over the next 12 to 24 months, no matterwho is in the white house, , come January.
, I think that people for certain typesof trips will continue to prefer
short term rentals over hotels.
, and we see that in the data, wesee a short term rental penetration
(28:19):
in terms of over overall lodging.
So the number of stayshappening in short term rentals.
Relative to hotels continue to grow,which tells me that we're still
writing , these tailwaves of Airbnbadoption in the broader marketplace.
, And that makes me feel comfortable,. Yeah, we might see increases and
decreases in occupancy over the nextone to two years, but I don't know about
(28:41):
you, Rachel, but I'm not making thisinvestment for the next one to two years.
I'm making this investmentfor the next five to 10 years.
, I'm looking for areas where I expectto see longer term growth in the
Metro areas that sort of support.
, Those destinations.
So part of why I bought a house in NorthGeorgia was I expect the continued growth
(29:01):
of the Atlanta metro area to continueto outpace other comparable metros.
So I want to look at.
Where are the areas thatpeople are moving to?
And then for those areas,where do they take vacations?
Cause that's where I'm going tofind my outsize sort of growth
compared to my competitors.
And I'm thinking competitorsnow, like other investors.
(29:22):
So like, where can I make thebest choice and where they're not
going to make the best choice?
, So I'm thinking about it in that way.
And.
So I'm betting on the long term healthof travel and of short term rentals,
taking a bigger piece of that pie.
, and I think that isabsolutely going to continue.
Rachel (29:39):
Okay.
, this is a great conversation.
And I know there's somuch I want to cover.
I want to cover regulations andall the things, but I want to
keep it tight for the people.
So I'm going to go in adifferent direction instead.
Now we were in the green room and alittle birdie told me that, Although
you are the head of data, we havea reluctant spouse in the room.
(30:00):
And a lot of our members encounter this.
We have the visionary, , the onespouse was like, Ooh, I could see this.
Vision , of this short termrental, , working out for us.
And then we have the conservative spouseis like, Hey, we can't, , necessarily
afford to take a risk on this.
That was my husband kicking and screaming.
I dragged him across the finishline to launch our first rental.
(30:22):
And now he's the head of operationsfor our entire portfolio, because it
really was impactful to our lives.
It's changed the game for us.
So Jamie, let us know a little bitabout your experience regarding.
reluctant spouse, as well as whatthis project is going to look like.
Cause I would love the audience totap in with you and to listen in
and experience, , you launching thisrental that you just shared with us.
, Jamie (30:44):
so what I was mentioning is we're actually doing a
whole series at AirDNA on it.
Cause I had started along on it, the on.
On the process and told ourmarketing team and they're like,
we want to capture this on video.
, so we just launched, , the firstepisode, , as of the beginning of
September, and it's going to bea whole eight episode series on.
They call it a Jamie's lane change.
(31:07):
, from, , short terminalexpert to rental rookie.
My first like full time investment.
, so what I had going for me ismy wife and I were hosting on
Airbnb back in 2014, 2015, 16.
We were actually hosting ina private room in our house.
So we love that interaction with guests.
So , she loved it.
(31:28):
She really took it on while wewere doing it of doing guest
communications, doing, , and allthe things, getting the house ready.
, so she loved that aspect.
The thing that I had to get herover the sort of line on was that it
wasn't too much of a risk for personalfinances and what essentially what.
What's the worst case scenario?
So that's where using the data andgoing back to the beginning of the
(31:51):
conversation of being able to showher, , this is who we're competing
with, this is how much they're earning.
, , and some of these properties, like it'sthe worst photos, it's, , it's furniture
that hasn't been updated in 40 years.
Those
Rachel (32:03):
market.
Jamie (32:04):
Yes.
And then showing her like what thesepeople are earning and it's like,
Oh wow, we're going to crush them.
Yes.
And then I'm outlining thefull sort of investment model.
All right, here's whatwe're going to buy it for.
Here's what I think we'regoing to earn and go.
I'm pretty conservative in termsof what we're going to earn.
Here's what it's goingto cost us to operate it.
(32:24):
So all the expenses associatedwith running that property, and
then here's what's left over.
This is found money for us.
As long as we're able to make thisinitial investment and here's what
that money's coming out of, andthen helping get comfortable.
Okay.
, that's the worst case scenario.
And then here's the, I would saythe best case scenario, or maybe my
expected scenario of , here's whathappens if we hit it out of the park.
(32:49):
, here's what's happens if we runlike where I think it's going to
run in the top tier of our market.
And then.
Like of then her seeing thatrange and , okay, like this could
actually be a real big benefit.
, and us growing sort of appreciationover time, us having that house to
potentially use when it's not booked.
(33:10):
, yeah, all those sort of thingsof helping make the case.
And then once she said, okay, I couldsee that happening, moving as quick
as humanly possible to make it happenbefore she changed her mind again.
Rachel (33:20):
The numbers do not lie, folks.
Data is the key.
That is the key.
That is, I'll call it thehusband repellent, right?
It helps the husband to come on board.
It helps the spouses, the partners,the wives to come on board.
Because now we are no longer investingfrom an emotional standpoint.
Like I, I feel like this mightwork, or I think this might work.
And we're opening ourwallets and risking it all.
(33:42):
We have the data to back us up.
And I love what you said that she wasalready, she has that hospitality inside
of her that she's done it already.
So she was able to connect the dot.
And one thing that's surprising insideof my community is all of my medical
professionals, when they launched,they didn't realize how much patient
care is in alignment , with guest care.
It's similar.
You're always wanting to makesure, Oh, I hope they're okay.
(34:03):
I hope they're having a good time.
It translates beautifully.
So absolutely love, love, love this.
And we're going to, , stayplugged in with you.
I do have a few minutes, sohopefully we can cover this in
just a few minutes that we have.
So Jamie, could you giveus a high level overview?
What are the one or two types?
Top things we need to consider withregulations is regulations bad.
(34:24):
, do we just avoid it?
Like the play any opinions?
Jamie (34:27):
In general, I love regulation.
I love operating in a market whereI know the rules of the road.
That said, there are somemarkets that have gone way
overboard in terms of regulation.
, and that's something that we have tobe very vigilant in monitoring for.
And then when we see it coming throughthe political pipeline, of being vocal
(34:49):
in our opposition, , if you're eitherthinking about investing in that market
or already operating in that market,, cause you are as an investor, All right.
You're a constituent in that market.
Yeah.
You're paying taxes.
, and that's something that, and localofficials, if they put out these
ideas and no one opposes them, thenI, and they see smooth sailing.
(35:10):
If they put out the ideas andthen they see massive opposition.
That they're, they canreally change course.
And we've seen that in so manycities around the country.
Atlanta was a great example of newlegislation coming in and even getting
enacted, and then there being so muchpushback from local hosts, local operators
(35:31):
that they essentially said, you knowwhat, we're not going to force this.
We're going to go backto the drawing board.
, so the biggest thing is getting involved.
, of staying on top of what's happening.
, but I am a big fan , of regulation ofmaking sure that I'm, and if there's
a need to get a permit, that you canget a permit, , that you can let the
city know that you've got a business.
Operating, , in their jurisdiction andthen have a way to stay informed to know
(35:56):
that they're earning taxes, , they'reearning revenues off of your business
and that it's actually a big benefit forso many local areas around the country.
Rachel (36:05):
Love that.
Love that.
All right.
So now we transition toour rapid fire segment.
It's going to be super quick.
Jamie, can you share a momentwhere you felt completely burnt
out and how you overcame it?
, Jamie (36:16):
prior to joining AirDNA, I was in the hotel industry.
, and my job in 2020 wasforecasting hotel demand.
, and I can tell you with the start of thepandemic, I felt, Entirely overwhelmed.
I'm sure with a bunch of healthcareproviders, I'm not nearly to
the extent that I'm many of yourlisteners were seeing it, but for
me, it was,, I needed a change.
(36:36):
, I didn't want to be talkingabout a recovery for the next.
And , I saw the situation that I didn'twant to be in and I made a change and I
actually made a full career move out ofthe hotel industry into short terminals.
Rachel (36:46):
Love that.
All right.
So don't be afraid of change guys.
What about a book?
What is a book or resource thatcompletely changed your perspective
on work or on life as a whole?
Jamie (36:58):
This is maybe an obscure one for this audience, but it was called,
, Signal and noise by Nate Silver.
So Nate Silver was actually who did 538.
, but he did wrote a whole book onrisk and analyzing data and it
really changed the way I thoughtabout data and it put some concepts
that I had internalized into words.
And you know, that time when youlike read something like, Yes.
(37:21):
That's the concept I'm thinking about.
Like it really solidifieda lot of thinking for me.
Rachel (37:24):
Oh, good one.
All right.
We'll link it.
I've never heard of it.
So thank you for sharing.
What is the craziest real estate storythat you have experienced or you've heard?
Jamie (37:34):
Yeah.
So When I bought the houseon in now, , it was in 2008.
This house was in foreclosure, , bankowned, , and it had been broken into
and someone had stolen all the copperpipes out of it at no plumbing, no
heating and air and 22 year old Jamiewas going to live in the house and
renovate it and get it back going.
The bank asked if it was livable.
I thought that that meant like.
(37:55):
Could I live in it?
And I was like, yeah, I'm goingto camp in my house and use
the bathroom down the street.
And so I said, yes.
I didn't know that that was a technicalterm of , did it have running water?
, lived in the house for three months,essentially without plumbing,
, getting the house up and running.
And, , it was a crazy experiencein this sort of depth of the
housing crisis to buy this house.
, renovate it, , and get it up and running.
(38:16):
And I've been living thishome now for 16 years.
Rachel (38:19):
Oh my gosh.
Okay.
I love that so much.
, my kids have banned mefrom doing any more.
I call them live in flips.
So Jamie, I knew therewas so much connection.
You being in the Atlanta marketas being data nerds, loving our
spreadsheets and numbers, but Ididn't know you did a live in flip.
So that brings us closer, my friend.
I love that.
Yeah.
Guys, that wraps up , ourepisode for today.
(38:40):
Thank you guys so much for tuning infor the luxury rental doctor show.
Jamie, it was such a pleasure having youall of the invaluable insights and guys,
we have barely scratched the surface.
Comment , in the chatbelow DM me, reach out.
We love using AirDNA.
I've got a lot of Data thatI extract from that there.
I share with you some of myfavorite cities using 75 gems in
(39:04):
order to , get the ball rolling,get you out of analysis paralysis.
So thank you.
Thank you.
Thank you guys for joining us.
Remember investing in luxuryshort and midterm rentals is
not just about the income guys.
It's about creating that time, freedom,that location, freedom, creating a
life that you do not need a vacationfrom until next time, my friends, Dr.
Rachel signing out.
(39:24):
Bye bye for now.
we might see increases and decreases in occupancy over the next
(00:03):
one to two years, but I don't know aboutyou, Rachel, but I'm not making this
investment for the next one to two years.
I'm making this investmentfor the next five to 10 years.
, I'm looking for areas where I expectto see longer term growth in the
Metro areas that sort of support.
, Those destinations.
Rachel (00:20):
Hello.
Hello.
My name is Dr.
Rachel Gainsborough, and I am obsessedwith all things, short term rentals,
revenue streams, and helping you navigateyour career, real estate, and your busiest
and most wonderful seasons of life.
So grab your coffee, get comfortable asyou get ready to learn and grow with me.
This is the luxury rental doctor podcast.
(00:44):
Jamie, as the head of data for AirDNA,what is the single most important
thing new investors need to be lookingat when they're looking to dive
into short term rental investing?
Jamie (00:56):
Obviously , as a data guy, , I always suggest that people Dig into
the data before they start investing.
, and that's what AirDNA reallytries to provide is when
you're going into a market, youdecided you're going to invest.
And what I always want peopleto do is start with just
getting a health of that market.
Getting a sense of how much issupply growing in that market.
(01:17):
So are there more competitors or less?
And just to give an example of likein New York right now with all the
regulation, there's significantlyless competition and you juxtapose
that to Paris coming off the Olympics.
There's so much morecompetition in that market.
So you couldn't like, puttogether like two.
Totally different markets right now.
(01:37):
So if there's a way that you couldoperate in New York today with all
that decreased competition, movingthrough the regulation noise, amazing
market right now on the other side,like Paris, like you've got so much more
competition and there's 50 percent morelistings today than there were last year.
That's going to be a really toughenvironment as a new investor
coming into that type of market.
(01:58):
So really getting a sense of.
What is the supply picture look like?
And then, , conversely onthe demand side, is there.
The demand keeping up withthat supply that's coming in.
, so just starting there, , as an economist,, me telling people, , get a sense of
your supply and demand, how much doessupply changing and is demand keeping up?
Rachel (02:18):
Okay.
So this is.
So good.
I was just on a coaching call yesterdayand we were looking at two markets that
are alarmingly large here for the U.
S.
Domestically, , one of our membershad a property that they wanted to
rent out from their mother to thenrent out to short term rental guests.
So essentially an arbitrage strategy.
(02:39):
It's in Miami.
So just to like narrow down and narrowdown and go further and further deep
into the sub market to even identifywhere that property is located, , was
really interesting and AirDNA helped us.
To accomplish that, , because there wereover 30, 000 listings, , in that market.
Similarly, we're looking at Orlando.
(03:00):
So these are markets with, , tens ofthousands of listings and the competition
is so steep and the properties thatare top performers were beautifully
laid out, but for the investment,, you're going to go in paying 1.
7 million and you're generating98, 000 a year, which.
98, 000 years, a whole salarysounds great, but do I, you know,
(03:22):
that mismatch of, , the grossyield or the return on that?
, I would question that, but sinceit's a property, her mom already
had, I was like, heck yeah, let'ssee, , how much juice we can squeeze
out of this particular property.
So that is awesome.
So you talked about supply and demand.
So in that situation, , we talked about,We know that Miami is the destination.
We know that Orlando isdefinitely a tourist destination.
So that's great.
(03:43):
, again, we were able to find thisinformation inside of air DNA.
, We digged in and we're so gratefulto have a tool where we're not second
guessing ourselves and we're able , tofind that information within the platform.
Jamie (03:55):
Yeah.
And that's a great sort of next stepthat I always talk people through is
once you get a sense of your market,the supply demand, then it's trying
to get a sense of how much is thatgoing to earn on average, and then
go into like revenue percentiles andyou can get a sense of like, Okay.
What is the average property earning?
Then get a sense of like, all right,what does that average property have?
(04:17):
And then going above and belowthat of like, all right, the top
performers, what are they doing?
The bottom performers,what are they doing?
And then where do I think myinvestment is going to slot into that?
Yeah.
And you could go into, , Orlandoand , run the numbers.
And it's like, Oh wow.
This is going to be a home run.
And then you look at thoseproperties and you're like.
Oh, I'm not going to do a full game room.
(04:37):
I'm not going to do a themed house.
Like I'm going to do like maybe theaverage and then you got to go in and
find other properties that are moreaverage in terms of their decor, their
amenities that they offer to someone.
Or if you are going to go all out andyou're going to invest a lot of money.
Like you can see what that potentialis and like what the top 10
percent of properties are earning.
(04:58):
And that may be what you want, butat least getting that range of not
every three bedroom home is going togenerate the same amount of revenue.
You got to understand the work thatgoes into What's going to be a top
performer versus what's going tobe an average performer and what's
going to be an under performer.
Rachel (05:15):
Okay.
, this is so good.
And I felt like this is probably goingto be one of those selfish episodes
that I asked my own personal questions.
I'm doing my best.
I'm doing my best to make sure we'regetting the information for the people.
So I think you're hitting thenail on the head of something
that is, is very, , controversial.
Some people go into air DNA and theyget a little bit, , excited when
they see that top number, they'relike, Oh, wow, I can make 107, 000.
(05:37):
Great bet.
You have to dig a little deeper.
You have to look at, , thosetop performing properties.
If it's an entire movie set where , theteam from Disney came in , and built
that out, and it's a 200, 000, 300, 000renovation, you want to ask yourself some
questions, like, Is, do I have this budgetto, to make something like this happen?
(05:58):
And I don't recommend it, honestly,if you're just getting started.
So take a B simplify , and determine,you know , what's going to be
within my budget, within my returnon energy as well, those types of
renovation projects, even if it's.
roof replacements, flooring, fix and flip.
, tHat's a lot of time capitaland you're managing contractors.
So I, I recommend small issue renovations,20 K and under, , just to get the
(06:22):
place a little bit more modernized.
So definitely, , take a look at that.
So supply, I feel like it's very obvious.
, I feel like, okay, we wereseeing 30, 000, 30, 000 listing.
That seems obviouS.
, that's a large supply.
So using AirDNA, Jamie, would wecompare year over year supply?
And as far as demand,what does that look like?
(06:42):
How do we know and how do we use thetool to the best of our ability to get a
good insight on what demand looks like?
Jamie (06:49):
Yeah.
So in the overview section of AirDNA,so you can go into Miami and like
right on the overview screen is a.
Chart of what has supply beenover the past three years.
So one of the fun new innovationswithin an air DNA is that that
chart is now filterable because notevery listing is the same, not every
listing , you're competing with.
(07:11):
So I can get a sense like.
If I'm doing an entire home listing,like I don't care about private and
shared rooms, so , let's get rid ofthose and see what the chart looks like.
If I'm doing a four bedroom house, likeI really don't care what's happening in
one and two bedroom properties in Miami.
So let's get rid of those.
And if I'm, let's saydoing a single family home.
(07:31):
Maybe I don't even care about what's inthe, all the multifamily, like Skyrise
apartments downtown, because what I thinkI'm going to be able to attract is people
that want a full single family home that,, is maybe outside of the downtown core.
So I can set those filters like housesand villas, , four or three plus bedrooms.
, And then get a sense of.
(07:52):
What is the supply look likejust for those type of properties
over the past few years?
And that's going to give me a senseof, okay, is supply increasing?
Is it decreasing?
Typically, like I want to seesupply increasing, like it is a red
flag for me by going to a market.
And see supply down over thepast year, because that tells
me that people are leaving.
(08:13):
People are leaving.
That's probably becausethey're not making money.
Rachel (08:16):
Oh, , can we let that breathe for a second?
For those who are sitting inthe back, let's come back to me.
If you're multitasking, whatJamie say that one more time
for those sitting in the back.
Jamie (08:27):
So if I look at a market and I see supply decreasing, that is a red
flag because it means people are leaving.
And if they're making money morethan likely, they're not going to be
Rachel (08:36):
leaving.
So good.
So good.
So we can equip ourselvesand mitigate risk, right?
By evaluating the numbers.
Is that right there?
You just gave us a wholegem, , watching that pattern,
that trend, are people leaving?
If people are running for thehill, something is the matter.
Something is wrong.
EiTher they're not making money.
Regulations have changed drastically.
Is that another red for you potentially?
Jamie (08:58):
That's another, like if I'm looking at New York and I'm
seeing dramatic declines in supply,it's like, all right, that's not
because people weren't making money.
Rachel (09:05):
Yeah.
Jamie (09:06):
Is because the city of New York implemented a new law that
essentially outlawed short termrentals or rentals less than 30 days.
So that to me is another red flag of,I need to dig a little bit deeper and
understand the regulation and maybe that.
Seeing that then allows me to Googlea bit and like, all right, like I
(09:27):
don't need to waste my time with thismarket because the regulation does
not allow what I'm looking to dO.
, conversely if I may be open tomidterm rentals and see that, Okay.
30 plus day stays are allowed in New York.
We've seen a big decrease in supply.
Maybe that is an opportunityfor me to look at in that city.
(09:47):
Oh, so good.
Rachel (09:48):
So good.
All right.
So I love this where thisconversation is going already.
You've already givenus , a, roadmap of identify.
Okay.
Is this market, , amarket worth looking into.
So what are some other, , I would saypitfalls or things that we should be
avoiding during our initial analysisfor all the new investors out there?
Jamie (10:07):
Yeah.
So next, like, all right, let'ssay I've looking at this market,
looking at Miami and I'm seeing.
Let's say 5 percent supply growth.
So no red flags on declines.
Like I'm seeing steady growth, whichis to me a sign of a healthy market.
, Then I want to get a sense of, okay,what is happening with occupancy?
Cause if occupancy is flat or increasing.
(10:29):
That lets me know that this market isabsorbing that supply, that there's more
people coming in and staying new gueststhan there are new supplier, at least.
, tHey're within the same realm.
If I start to see big decreasesin supply, let's say, , are in
occupancy, let's say supplies up 5%.
And occupancy is down 5%.
(10:50):
That tells me that, allright, , demand is flat.
There's the same number of people staying.
There's just more supply, whichmeans everyone's getting a little
bit less in terms of, , guess.
So what I, what the sweet spotis, is that like supplies growing,
but occupancy staying flat.
, or increasing, which tells me thatthis market is poised for more growth.
(11:11):
If I'm looking at a market where it'ssupplies growing and occupancy is
decreasing, it means that it mightbe oversaturated at this point, or at
least that there's not enough demandto keep up with the supply, , that
could be temporary, so I'd want to lookat that over time, but at least tells
me that I probably need to look more.
Rachel (11:28):
Okay.
So when you say, when you'relooking at the occupancy.
Are you looking at the overall occupancypercentage for that period of time and
Jamie (11:39):
comparing looking at, I'm looking at it for that period of
time and compared to last year.
Okay.
So on the sort of top of thepage, it's going to give you the
occupancy for the last 12 months.
Okay.
And then it's going to tellme if the occupancy for the
last 12 months is greater.
Or less than the year prior.
We make that very front and center ofif that's positive and green, , okay.
(12:00):
You're good.
If it's flat, you're still probably good.
If it's declining in red,that means there's something
to look in further there.
Rachel (12:08):
Interesting.
Okay.
I want to do something alittle bit non traditional.
, typically for the podcast, , Irespect that it's an audio platform,
but guys, I want you to see this.
I think it's just so important.
I'm a visual learner andI'm sure you are too.
So as Jamie's talking, I'm on the sidewith one hand on my keyboard and I just
(12:29):
pulled up that market that I mentioneda little bit earlier in Miami and what
Jamie was just mentioning for those whoare listening on the podcast, head over
to the YouTube channel because I've got ascreen share real quick just for a moment.
Okay, I'm not going to.
Go all in, but Jamie, we might need to doa little screen share walkthrough, , at
some point, but , we'll figure that out.
But I'm looking at thisoccupancy rate here.
We're at 59%.
(12:51):
And guys, for those of you whoare long term, , rental investors,
listen, It's a mindset shift.
It's a mindset shift.
We are not necessarily looking for 100percent occupancy for short term rentals,
especially for a larger properties.
We like 65 percent to 75 percent fora larger properties for short term
rentals are midterm rentals wereable to achieve a 90 plus percentage.
(13:14):
But the reason that 65to 75 percent occupancy.
Is the sweet spot for us for ourfive bedroom pluses is because we
have time in between to let theproperty breathe a little bit.
We're able to really make all ofthose, , maintenance calls and updates
to make sure the product is in tippytop shape and we make more money at that
little bit of a lower occupancy ratethan if we were to keep it booked all
(13:36):
the time and start getting complaints.
Complaints if it'sbooked at 90% occupancy.
We get complaints.
We just don't have the timeto, , tighten up all the screws.
So keep that in mind.
I know I went on a tangent,re-listen to that part.
, but nevertheless here I'm seeing anoccupancy rate of 59% with a plus 2%.
So you're telling me this is theyear over year comparison, Jamie.
Jamie (13:55):
Yep.
So looking at over the past yearthat it's run at 59 percent and
you can see it down below there.
So we're peaking out in March atjust over 75 percent and we hit a
low in September of just under 50%.
So average is out to 59%.
And that 9 percent for this past year,and that's from September to August, , is
(14:18):
2 percent higher than it was in thesame 12 month period the year prior.
If you click on that dropdown,you can change it from past
12 months to past two years.
So you can actually see by month whereit's either increase or decrease.
Rachel (14:34):
Nice.
Nice.
Okay.
So this is so good.
So Jamie, when we hear, , the rhetoricthat all the markets are saturated,
Airbnb saturated, now we have a tooL.
, that we could leverage , andidentify whether that's true
or not, because saturation is ascientific and economic term, right?
It's not just, it's saturated.
(14:55):
Cause I feel like it's saturatedor it's actually, cause I see
a whole lot more listings.
There's a little bit more to that, Jamie.
Jamie (15:01):
Yeah.
And it's definitely something thatwe want to look at over time because,
and you can't get around the factthat the industry went through
a boom In 2021 and 2022, , justabout every market you look at.
Reached peach peak occupancylevels during that time.
And it wasn't because all of a suddenrecord number of people were using short
(15:25):
term rentals because of the pandemiccaused 20 percent of the listings
out there that disappear overnight.
People that had secondhomes started using them.
People that were renting outmultifamily buildings in urban areas.
So their demand disappear.
So they converted it to long term rentals.
, aNd as demand after COVID came back,that caught, that just pushed occupancies
(15:46):
much higher than we'd ever seen before.
So as an industry, we have been comingoff of those highs, but it's not to
the way where like it's alarming to me.
Given that we're now likeroughly at pre COVID levels.
So we can go back and air DNA and seewhat that market was operating at in 2018,
2019, before things got crazy with COVID.
(16:09):
And that's my sort of comparisonof are we really weak?
Or is this just what I shouldexpect for this market?
Cause the highs of 2021 and 2022.
We're not to be expected to last forever.
We were forecasting thatthey were going to come down.
They did come down.
And so now when I'm getting a sense, is59 percent good for, , for Miami Dade,
(16:31):
it's like, all right, , let's look at howthat market looks like back through time.
And that can give me a senseof, all right, , yeah, March,
I can expect things to be high.
But no, a lot of people, a lot of touristsaren't coming there in the winter.
Are in the summer, , duringthose really hot months in Miami.
So 59 percent is probably what Ican expect, , in a healthy market.
(16:52):
Given that I'm going to have somehigh months and some low months.
Rachel (16:54):
Got it.
Okay.
This is so good.
What are some other tips that weneed to take into consideration
when you're using AirDNA?
And for those who may not be aware,AirDNA is my number one go to tool for
evaluating new markets for short termrentals to, for evaluating our current
markets, , for short term rentals as well.
We want to keep, , A pulse on how ourproperties are doing on a quarterly
(17:17):
basis compared to the market as a whole.
So I find it to be the mostcomprehensive tool that's out there.
And the reason I love it is becausewe have those years and years
and years worth of data that wecan use, that we could review.
You just mentioned how to setourselves up for success by really
looking at the pre COVID numbers,2018, 2019, because now we're.
(17:38):
In that, , pre COVID environment.
, whAt else do we need to know?
Jamie (17:41):
Yeah.
And we touched on it a little bitearlier, but when you're using our
rental calculator or rentalizerthat we call it, , a lot of times
you can get really excited when youfirst see that number or get really
fast when you first see that number.
Really, that's it.
The thing to know is that what thattool is doing is it's going out and
trying to find comparable properties.
And the typical rentalizer estimate,it's going to pull 12, 15, 20, 30
(18:05):
properties to you and creating thatas a user, as someone doing their full
due diligence, it is imperative thatthen you go and actually review those
properties that are being included init, because that's going to give you a
sense of, all right, maybe these comps.
Aren't relevant to the propertythat I'm actually investing in.
(18:26):
And so what I typically do is Ilook at each comp I'll click into
them and you can click into eachproperty and click through the photos.
so if you just scroll allthe way to the bottom.
That shows you each property that'sbeing used or you can't click on the all.
, it's bad.
, But you can scroll to the right.
There's an arrow there.
Just that's what I was looking for.
(18:47):
Yes.
So you can scroll through each of thoseand you can get it and click into them.
, Get a sense of, do you think thatproperty is comparable or not?
And then what I do is, , mentallyare jot down here are the figures
for the ones that I think arereally comparable with mine.
And here are the ones that I don't.
And when I average those together that Ithink that are really comparable to mine,
(19:10):
that gives me a, in my opinion, a muchbetter estimate than our overall figure.
And we do, we're gonna have some funupdates to the tool coming up where
you can actually do that on the fly,where you can add remove properties.
Oh, but for now,
But for now, it's , a, you'll lookthrough, and sort of note 'cause and just
(19:32):
here we see a range of $143,000 to., 59,
Rachel (19:37):
000.
Jamie (19:37):
So whether or not that 59, 001 is comparable or whether, maybe it's
the 148, 000 one that's a bit too high.
I'm being able to throw out the outliers.
, and get to a much more tight rangeof what, , the properties are that
are being used in this estimate.
I think we'll reallyget, , people comfortable.
And even like, when we look at this map,like you see the two on the other side of
(20:01):
the river, as opposed to all these others.
Within the same neighborhooD.
this is where, like when rentalizer andthe tools going at it, it's just drawing
circles and looking at a closer, , tome, I would say , you know what, that 94,
000, 124, 000, like given that I've gotso many in their exact same neighborhood.
Let me stick with those and let meget rid of those two other properties.
(20:24):
Cause even though they might becomparable, like I have all these other
great comps in the same neighborhoodthat I should probably be using.
Rachel (20:30):
So you're able to then narrow your focus.
And I think that's wherethe overwhelm comes in.
You go into a market like central Dade,Miami, , or Orlando, and then there's.
Tens of thousands, but if we could whittleit down, what's a good number for you?
I tell my members.
I like to see, , about20 listings to start.
And then we have our top tier thatwe know, okay, there's no way we're
(20:51):
going to achieve that because there'sa lagoon size pool, lazy river.
And then, so we know that's theceiling, that's the ceiling for us.
And then the worstproperty ever, the Okay.
photos.
It looks like grandmathrough, , through it together.
No offense, grandma.
I love you to pieces, right?
So we know that , we candefinitely, there's no way we're
going to do worse than this.
So in between it's the inbetween, but I find there's
(21:12):
some clusters sometimes, Jamie.
So there's like a batch that's in this.
78 77, 000 and then a batchthat's in the, , low fifties.
So at that point, it's a lot ofdeductive reasoning, , for my members.
I call it our PACU method.
Okay.
If it's in a destination,touristic destination, what's
the proximity to the things?
Stuff so suburban, , how closeit's to the good shops and , beach,
(21:34):
how close it is to the water.
So those are some things that you can say,okay, this property is better than mine.
Mine is like a give or take.
We go back and forth and that's theonly way that I know to do that.
For those last properties that arestanding, maybe there's eight of them,
And I just ping pong back andforth and determine, am I superior
or am I inferior to that property?
And just being radicallyhonest with myself.
(21:57):
Is that what you would recommend?
Give me some pointers.
How do I improve thatprocess a little bit?
Jamie (22:01):
No, a hundred percent.
I love it.
, cause I do the exact same thing.
I start with 20 to 30 properties thatare in proximity, same bedroom baths,
like accommodate, I'll go ahead andfilter out some that have or don't
have pools, like depending on what myproperty is going to have or hot tub.
And then it's the real work, right?
Of evaluating each comp.
And then ideally for me, it's getting to areally strong set of six to 10 properties.
(22:27):
Then , If I can operate at thesame level as these properties,
this is what I'm going to earn.
And that gives me the confidencein making an investment.
Like you said, like it takes a work.
So I'm spending a minimum, like 30 minutesto an hour evaluating comps for each.
Property that I'm looking to invest inwhen I'm doing that next level dive.
(22:50):
Like maybe I'll use the rentalizer numberas my initial screen of , does this yield
number make sense for me to dig deeper?
And then when I'm digging deeper, that'swhen I'm evaluating each individual comp.
To get a sense of does thisrepresent, , and similar to the
investment that I'm looking to make.
Rachel (23:08):
Love that.
Okay.
So let's go back to the different, , Iwould say products within AirDNA.
Of course, there's the Rentalizer.
I say AirDNA is freemium becauseyou, there is some, Aspect of it.
That's free.
You can look at the rentalizer,, that information for me.
I like to see what the occupancyrate is looking like for a market.
If I get a 50 percent or more occupancyrate already, that's a thumbs up for me.
(23:31):
It's like, okay, peopleare coming to this market.
If it's like in the 20 or 30%, it's like,oh, I don't even, I'm not interested.
I get nervous, right?
Because I don't have a, I'm notdoing a big rural glamping situation
right where you might see that.
Number one.
, number two, I take a look at therevenue, a potential high level.
I know it's, it averages all ofthose, , properties that are there,
(23:52):
but I'm still going to need to, , dosome, , digging, but what I do with
that number, say the revenue for athree bedroom, two bathroom, six guests.
And you want to make sure you've updatedthose, , data points, , is 70, 000.
And I go into the market, thepurchase price for a three bedroom,
two bathroom property ranges from 1.
(24:13):
8 million to 2.
5 million.
, that math isn't mathing for me, right?
So that's, I go to Zillow.
I'll have my rentalizer and I'll haveZillow side by side and say, okay,
for this price point, What is thepurchase price of properties available?
And so that's not goingto make sense for me.
And I did that analysis.
I found an area in Durham.
No, was it Raleigh?
So it was five bedrooms in Raleigh,a 74 percent occupancy rate.
(24:35):
Revenue potential was like 75, 000for that particular zip code, that
address like at that, , I foundanother property a while back.
It was like 999, 000 to 2.
5 million.
I was like, okay, now I'm lookingmore around the 500, 000 range.
What can I find for that?
So that immediately informs you, , yayor nay, do I want to dive deeper?
But the deep dive has to happenbefore we open our wallets.
(24:58):
Right, Jamie?
Jamie (24:58):
Yeah.
And Again, a pro tip, , you nowdon't have to go to Zillow for that.
So with AirDNA now pulling in all thefor sale properties on Zillow or homes.
com or Redfin, you canactually see all those.
Let's say you're lookingin that sub market.
You can go to the for sale properties andinstead of having to run each property
(25:19):
one by one through the for sale section,, so if you just click, , back, it should
take you to whatever market you werein, , or keep going, , so now we're in
Central Dade, , you see it, , it hasthe 635 for sale properties listed.
So now you can see each home that'savailable for sale and then what our
(25:41):
estimated revenue is for that property.
So you're getting essentially usrunning a rentalizer and every
property available for sale.
And we're going to tell you inone view what those figures are.
Rachel (25:55):
Okay.
Okay.
So I have not used it like this yet.
So for those of you who are listening,guys, I am sharing screens again.
This is so easy.
So for instance, this one is athree, two, a for sale is 625 and
the revenue, , potential is 59, 000.
300.
I've got the number of days on the market.
This is fantastic.
(26:16):
69 percent occupancy rate.
I think like something just poppedin my brain and it's sad cause , I
knew this was here, Jamie, butI didn't make the connection.
Jamie (26:25):
Yeah.
, And a lot of people haven'tmade the connection yet.
And the, One additional thing that we'regoing to have in the next few weeks, , is
we'll have the gross yield listed on it.
So making that calculationfor you of what is the revenue
divided by the for sale property.
I just fell out of my seat
Rachel (26:40):
y'all.
Jamie (26:43):
And then allow you to sort.
, we're seeing what peopleare doing manually.
And then trying to make it easier foryou to find those good investments.
Rachel (26:51):
Oh my goodness.
Okay.
So good.
So good.
Jamie.
One thing that you guys made easier forme as well was, , the table view that I
can then export chef's kiss, my favoritefavorite thing, my favorite thing.
I have so many spreadsheets where.
I can make my little notations as well.
So , this is so good.
This has been amazing.
(27:11):
So all this to say for those who arejust listening in and who are like,
okay, you guys went deep on the data,but Jamie is Airbnb even viable still?
Everyone's talking about Airbnb bus.
Is Airbnb dead?
Talk to people.
, Give us your honest.
Unadulterated thoughts , on how,, the future for Airbnb, , looks
(27:31):
as far as short term rentalinvesting, midterm rental investing.
Tell us.
Jamie (27:35):
Yeah.
So I'm putting my money where my mouth is.
Just made my own investment.
, closed on a house about three.
That I'm going to runas a short term rental.
, but, and what I tell people is you'vegot to get comfortable that people are
going to continue to choose short termrentals over other forms of lodging and
are going to continue to be traveling.
So people will travel if theyhave a job and have income.
(27:58):
I do not believe that we're goingto be going through a recession.
Over the next 12 to 24 months, no matterwho is in the white house, , come January.
, I think that people for certain typesof trips will continue to prefer
short term rentals over hotels.
, and we see that in the data, wesee a short term rental penetration
(28:19):
in terms of over overall lodging.
So the number of stayshappening in short term rentals.
Relative to hotels continue to grow,which tells me that we're still
writing , these tailwaves of Airbnbadoption in the broader marketplace.
, And that makes me feel comfortable,. Yeah, we might see increases and
decreases in occupancy over the nextone to two years, but I don't know about
(28:41):
you, Rachel, but I'm not making thisinvestment for the next one to two years.
I'm making this investmentfor the next five to 10 years.
, I'm looking for areas where I expectto see longer term growth in the
Metro areas that sort of support.
, Those destinations.
So part of why I bought a house in NorthGeorgia was I expect the continued growth
(29:01):
of the Atlanta metro area to continueto outpace other comparable metros.
So I want to look at.
Where are the areas thatpeople are moving to?
And then for those areas,where do they take vacations?
Cause that's where I'm going tofind my outsize sort of growth
compared to my competitors.
And I'm thinking competitorsnow, like other investors.
(29:22):
So like, where can I make thebest choice and where they're not
going to make the best choice?
, So I'm thinking about it in that way.
And.
So I'm betting on the long term healthof travel and of short term rentals,
taking a bigger piece of that pie.
, and I think that isabsolutely going to continue.
Rachel (29:39):
Okay.
, this is a great conversation.
And I know there's somuch I want to cover.
I want to cover regulations andall the things, but I want to
keep it tight for the people.
So I'm going to go in adifferent direction instead.
Now we were in the green room and alittle birdie told me that, Although
you are the head of data, we havea reluctant spouse in the room.
(30:00):
And a lot of our members encounter this.
We have the visionary, , the onespouse was like, Ooh, I could see this.
Vision , of this short termrental, , working out for us.
And then we have the conservative spouseis like, Hey, we can't, , necessarily
afford to take a risk on this.
That was my husband kicking and screaming.
I dragged him across the finishline to launch our first rental.
(30:22):
And now he's the head of operationsfor our entire portfolio, because it
really was impactful to our lives.
It's changed the game for us.
So Jamie, let us know a little bitabout your experience regarding.
reluctant spouse, as well as whatthis project is going to look like.
Cause I would love the audience totap in with you and to listen in
and experience, , you launching thisrental that you just shared with us.
, Jamie (30:44):
so what I was mentioning is we're actually doing a
whole series at AirDNA on it.
Cause I had started along on it, the on.
On the process and told ourmarketing team and they're like,
we want to capture this on video.
, so we just launched, , the firstepisode, , as of the beginning of
September, and it's going to bea whole eight episode series on.
They call it a Jamie's lane change.
(31:07):
, from, , short terminalexpert to rental rookie.
My first like full time investment.
, so what I had going for me ismy wife and I were hosting on
Airbnb back in 2014, 2015, 16.
We were actually hosting ina private room in our house.
So we love that interaction with guests.
So , she loved it.
(31:28):
She really took it on while wewere doing it of doing guest
communications, doing, , and allthe things, getting the house ready.
, so she loved that aspect.
The thing that I had to get herover the sort of line on was that it
wasn't too much of a risk for personalfinances and what essentially what.
What's the worst case scenario?
So that's where using the data andgoing back to the beginning of the
(31:51):
conversation of being able to showher, , this is who we're competing
with, this is how much they're earning.
, , and some of these properties, like it'sthe worst photos, it's, , it's furniture
that hasn't been updated in 40 years.
Those
Rachel (32:03):
market.
Jamie (32:04):
Yes.
And then showing her like what thesepeople are earning and it's like,
Oh wow, we're going to crush them.
Yes.
And then I'm outlining thefull sort of investment model.
All right, here's whatwe're going to buy it for.
Here's what I think we'regoing to earn and go.
I'm pretty conservative in termsof what we're going to earn.
Here's what it's goingto cost us to operate it.
(32:24):
So all the expenses associatedwith running that property, and
then here's what's left over.
This is found money for us.
As long as we're able to make thisinitial investment and here's what
that money's coming out of, andthen helping get comfortable.
Okay.
, that's the worst case scenario.
And then here's the, I would saythe best case scenario, or maybe my
expected scenario of , here's whathappens if we hit it out of the park.
(32:49):
, here's what's happens if we runlike where I think it's going to
run in the top tier of our market.
And then.
Like of then her seeing thatrange and , okay, like this could
actually be a real big benefit.
, and us growing sort of appreciationover time, us having that house to
potentially use when it's not booked.
(33:10):
, yeah, all those sort of thingsof helping make the case.
And then once she said, okay, I couldsee that happening, moving as quick
as humanly possible to make it happenbefore she changed her mind again.
Rachel (33:20):
The numbers do not lie, folks.
Data is the key.
That is the key.
That is, I'll call it thehusband repellent, right?
It helps the husband to come on board.
It helps the spouses, the partners,the wives to come on board.
Because now we are no longer investingfrom an emotional standpoint.
Like I, I feel like this mightwork, or I think this might work.
And we're opening ourwallets and risking it all.
(33:42):
We have the data to back us up.
And I love what you said that she wasalready, she has that hospitality inside
of her that she's done it already.
So she was able to connect the dot.
And one thing that's surprising insideof my community is all of my medical
professionals, when they launched,they didn't realize how much patient
care is in alignment , with guest care.
It's similar.
You're always wanting to makesure, Oh, I hope they're okay.
(34:03):
I hope they're having a good time.
It translates beautifully.
So absolutely love, love, love this.
And we're going to, , stayplugged in with you.
I do have a few minutes, sohopefully we can cover this in
just a few minutes that we have.
So Jamie, could you giveus a high level overview?
What are the one or two types?
Top things we need to consider withregulations is regulations bad.
(34:24):
, do we just avoid it?
Like the play any opinions?
Jamie (34:27):
In general, I love regulation.
I love operating in a market whereI know the rules of the road.
That said, there are somemarkets that have gone way
overboard in terms of regulation.
, and that's something that we have tobe very vigilant in monitoring for.
And then when we see it coming throughthe political pipeline, of being vocal
(34:49):
in our opposition, , if you're eitherthinking about investing in that market
or already operating in that market,, cause you are as an investor, All right.
You're a constituent in that market.
Yeah.
You're paying taxes.
, and that's something that, and localofficials, if they put out these
ideas and no one opposes them, thenI, and they see smooth sailing.
(35:10):
If they put out the ideas andthen they see massive opposition.
That they're, they canreally change course.
And we've seen that in so manycities around the country.
Atlanta was a great example of newlegislation coming in and even getting
enacted, and then there being so muchpushback from local hosts, local operators
(35:31):
that they essentially said, you knowwhat, we're not going to force this.
We're going to go backto the drawing board.
, so the biggest thing is getting involved.
, of staying on top of what's happening.
, but I am a big fan , of regulation ofmaking sure that I'm, and if there's
a need to get a permit, that you canget a permit, , that you can let the
city know that you've got a business.
Operating, , in their jurisdiction andthen have a way to stay informed to know
(35:56):
that they're earning taxes, , they'reearning revenues off of your business
and that it's actually a big benefit forso many local areas around the country.
Rachel (36:05):
Love that.
Love that.
All right.
So now we transition toour rapid fire segment.
It's going to be super quick.
Jamie, can you share a momentwhere you felt completely burnt
out and how you overcame it?
, Jamie (36:16):
prior to joining AirDNA, I was in the hotel industry.
, and my job in 2020 wasforecasting hotel demand.
, and I can tell you with the start of thepandemic, I felt, Entirely overwhelmed.
I'm sure with a bunch of healthcareproviders, I'm not nearly to
the extent that I'm many of yourlisteners were seeing it, but for
me, it was,, I needed a change.
(36:36):
, I didn't want to be talkingabout a recovery for the next.
And , I saw the situation that I didn'twant to be in and I made a change and I
actually made a full career move out ofthe hotel industry into short terminals.
Rachel (36:46):
Love that.
All right.
So don't be afraid of change guys.
What about a book?
What is a book or resource thatcompletely changed your perspective
on work or on life as a whole?
Jamie (36:58):
This is maybe an obscure one for this audience, but it was called,
, Signal and noise by Nate Silver.
So Nate Silver was actually who did 538.
, but he did wrote a whole book onrisk and analyzing data and it
really changed the way I thoughtabout data and it put some concepts
that I had internalized into words.
And you know, that time when youlike read something like, Yes.
(37:21):
That's the concept I'm thinking about.
Like it really solidifieda lot of thinking for me.
Rachel (37:24):
Oh, good one.
All right.
We'll link it.
I've never heard of it.
So thank you for sharing.
What is the craziest real estate storythat you have experienced or you've heard?
Jamie (37:34):
Yeah.
So When I bought the houseon in now, , it was in 2008.
This house was in foreclosure, , bankowned, , and it had been broken into
and someone had stolen all the copperpipes out of it at no plumbing, no
heating and air and 22 year old Jamiewas going to live in the house and
renovate it and get it back going.
The bank asked if it was livable.
I thought that that meant like.
(37:55):
Could I live in it?
And I was like, yeah, I'm goingto camp in my house and use
the bathroom down the street.
And so I said, yes.
I didn't know that that was a technicalterm of , did it have running water?
, lived in the house for three months,essentially without plumbing,
, getting the house up and running.
And, , it was a crazy experiencein this sort of depth of the
housing crisis to buy this house.
, renovate it, , and get it up and running.
(38:16):
And I've been living thishome now for 16 years.
Rachel (38:19):
Oh my gosh.
Okay.
I love that so much.
, my kids have banned mefrom doing any more.
I call them live in flips.
So Jamie, I knew therewas so much connection.
You being in the Atlanta marketas being data nerds, loving our
spreadsheets and numbers, but Ididn't know you did a live in flip.
So that brings us closer, my friend.
I love that.
Yeah.
Guys, that wraps up , ourepisode for today.
(38:40):
Thank you guys so much for tuning infor the luxury rental doctor show.
Jamie, it was such a pleasure having youall of the invaluable insights and guys,
we have barely scratched the surface.
Comment , in the chatbelow DM me, reach out.
We love using AirDNA.
I've got a lot of Data thatI extract from that there.
I share with you some of myfavorite cities using 75 gems in
(39:04):
order to , get the ball rolling,get you out of analysis paralysis.
So thank you.
Thank you.
Thank you guys for joining us.
Remember investing in luxuryshort and midterm rentals is
not just about the income guys.
It's about creating that time, freedom,that location, freedom, creating a
life that you do not need a vacationfrom until next time, my friends, Dr.
Rachel signing out.
(39:24):
Bye bye for now.
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